Capital Product Partners (CPLP), a Marshall Islands master limited partnership, has agreed to merge its crude and product tanker business with US-based tanker company DSS in an all-stock deal worth $1.65bn.
As part of the agreement, CPLP will first spin off its crude and product tanker business into a new company, which will eventually merge with DSS. Based in the US, DSS owns and operates medium-range product and Suezmax crude tankers.
CPLP’s general partner Capital GP director and CEO Gerasimos Kalogiratos said: “This transaction also enables CPLP to combine its tanker assets with DSS, a market leader that will be led by an accomplished management team with an excellent industry track record.”
“Finally, this transaction allows CPLP to reshape its business with a modern fleet that has a remaining average charter duration of 5.3 years, providing CPLP unitholders with more stability and cash flow visibility.”
Post the merger, the new company to be called Diamond S Shipping is expected to become a major player in the crude and product tanker markets.
To be headquartered in Greenwich, Connecticut, Diamond S Shipping is expected to benefit from a balanced and large-scale portfolio of vessels to go along with a cost-efficient commercial platform.
The company’s asset portfolio will feature product and crude tankers of CPLP and DSS. Overall, Diamond S Shipping will have 68 tankers, with an average age of 7.8 years, out of which 52 are product tankers while 16 are crude tankers.
The new company is anticipated to be the third largest publicly traded product tanker operator and the fifth largest public tanker company in the world.
Post the merger, CPLP shareholders will own a stake of around 33% in Diamond S Shipping while the remaining stake will be owned by DSS equity owners.
DSS CEO Craig Stevenson, Jr. who will be the CEO of Diamond S Shipping, said: “This transaction will occur at an opportunistic time in the cycle and creates one of the largest, highest quality fleets and best capitalized public shipping companies in the market.
“We are confident that this unique combination will create significant shareholder value through the cycle by using our cash flow to invest in the business via acquisitions and returning capital back to our shareholders. We look forward to leveraging CPLP’s outstanding expertise and industry reputation as we work to grow the business together.”
The transaction will be subject to certain conditions with one of them being the US Securities and Exchange Commission declaring effective the registration statement of Diamond S Shipping.